I do like this story - I'm glad that you made Beauxbatons neutral, instead of frilly. Having Dumbledore block the owls of other schools also just makes sense - having only enough children each year to make up a class of 40 or so, with several of them coming outside of your usual population, just isn't viable to create anything more than a tiny village. I think that there must be other schools in England (and especially Wales and Ireland - can you imagine a group of people as traditional as wizards dropping the language and cultural separation, when muggles haven't completely?), and it makes sense that schools on the continent would be less limited by borders than Hogwarts. Hogwarts is so insular, even in canon.
Also, I like your Harry, and I think he'll grow up to be a better person with a stronger character and more skills in the school that you've set up.